In the future, the conventional hydraulic brake system in automobiles will be removed and replaced by an electrically operated brake system called brake-by-wire. The brake-by-wire units, such as the EMB (Electro-Mechanical Brake), provide better braking performance by directly controlling the brake motor and are environmentally friendly because they do not use hydraulic fluid. For implementation of the EMB systems, reliable and robust fault detection and diagnosis methods become increasingly important. In this study, a sensor fault diagnosis method is proposed with parity space and observer approaches to detect faults in the motor current sensor, speed (or position) sensor and clamping force sensor. The proposed method is verified through a closed-loop simulation using Matlab/Simulink, and the simulation result is compared with the HILS bench test results.